BEIJING--China will raise retail fuel prices effective Friday, for the first time since March, amid higher benchmark global oil prices.

The move indicates that authorities are comfortable with the country's inflation outlook. It will also provide some relief to domestic refiners, which are unable to pass on higher crude costs to consumers due to state caps on domestic prices.

Retail gasoline and diesel prices will be raised by 390 yuan (about $61) a metric ton and CNY370/ton, respectively, the National Development and Reform Commission said Thursday.

These represent increases of 4.5% and 4.7% from current average gasoline and diesel retail ceiling benchmarks of CNY8,700/ton and CNY7,910/ton, respectively, according to Dow Jones Newswires calculations. The exact price ceiling varies by geographic location.

China's pricing system allows domestic fuel prices to be adjusted when the 22-working-day moving average of a basket of international crudes changes by more than 4% since the last adjustment.

As of Wednesday, the value of China's crude basket had risen 7.2% since July 9--the date of the basket price used as a basis for the last price cut, energy consultancy ICIS C1 Energy said.

Global oil prices began to decline from April in part due to concerns over European demand, but rebounded end-June partly on expectations that China, the U.S. and the European Union will stimulate their economies and on concerns of potential supply disruptions from Iran and Syria.

"The timely price adjustment enables China's domestic retail fuel market to better reflect international oil price trends and also lays a good foundation for China to reform its pricing of refined oil products," analysts from Shandong-based energy consultancy Chem99 said Thursday in a note.

The NDRC has adjusted fuel prices six times this year, split evenly between hikes and cuts, the analysts said, adding that it typically adjusted prices immediately after conditions were met, except in March during China's National People's Congress.

Growth in China's consumer price index has slowed for four consecutive months, making it easier for the government to raise prices to provide some relief to domestic refiners.

Top refiners PetroChina Co.
PTR, -1.48%
and China Petroleum & Chemical Corp., or Sinopec Corp.
SNP, -0.86%
previously said they booked a combined loss of CNY19.57 billion in the refining business in the first quarter due to higher oil prices.

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